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VIEWPOINT: Investment in children

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It is estimated to cost between R2 million and R4,5 million to raise and educate a middle-class child in South Africa, depending on private school and tertiary education (never mind postgraduate and professional qualifications). In the US, CNN estimated the cost at $241 000 to the age of 18, excluding college. Furthermore, the UK Guardian in 2013 reported that over the last decade, the cost of raising children had increased by some 58 per cent, with education costs up by 124 per cent. It’s an enormous investment but who considers protecting it?

As financially responsible parents, we aim to provide sufficiently for our children – a roof over their heads, food, their daily living expenses and the best education we can afford.

Whereas in our own financial plans we provide for our own death or disability – with life and disability cover, and savings for education costs – what financial provisions do we make in the event that our children as young adults become disabled or suffer severe illness during that critical lifestyle evolution from scholar to university student?

At school they are cocooned to a large degree from everyday risks: they are driven to school and fetched; they attend the occasional party; they spend their non-school time generally in the safety of their homes.

Now they leave school: they are new drivers and with this come additional risks. Short-term insurers have identified this age group as high-risk and levy increased premiums. With a car comes nights on the town – even more risk. Furthermore, during their undergraduate years they are not yet qualified in any occupation while still studying towards a career.

Pat Fletcher, an Executive Planner at Consolidated, warns that “parents are often so focused on providing for education costs and getting our young adults on their feet financially that they omit to consider the devastating financial implications to their own lives should those young adults become disabled or suffer a severe illness like cancer during this pivotal time of their life. Medical aid will cover the medical costs, but what of the cost of supporting an incapacitated dependant for the rest of their lifetime – including loss of their future income, adjustments to a home environment and nursing care?

“The cost of such cover is affordable, so is it not worth spending an extra R200/month to secure cover for R1,5 million? You can obtain cover for disability as a result of an accident, or more comprehensive cover for severe cancers, burns, blindness, loss of limbs and more.

“The amount of cover is limited as the intention is not to enrich the parents in the event of a disability.”

It’s worth protecting their future and yours. ❐

Author: Mike Lledo

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